STATES Act Would Protect New Jersey’s Legalized Cannabis Industry

STATES Act Would Protect New Jersey’s Legalized Cannabis Industry

As states like New Jersey move forward with efforts to legalize recreational marijuana, the federal Controlled Substances Act (CSA) remains a significant roadblock for the cannabis industry. Because marijuana remains illegal under federal law, businesses in states where it is legal still have difficulty securing loans, leasing commercial space, obtaining insurance, and accessing banking services.

Photo courtesy of Kym (Unsplash.com)

Bill Sanctions State-Level Cannabis Legalization

On June 7, 2018, a bipartisan group of senators and representatives introduced the “Strengthening the Tenth Amendment Through Entrusting States Act” (STATES Act). The proposed legislation (S. 3032; H.R. 6043) amends the CSA to exempt marijuana legalized at the state level.

As referenced in the title of the bill, the authority for the legislation is premised on the Constitution’s 10, which states, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.” As the official description of the bill explains, “strengthening the Tenth Amendment …ensures that each state has the right to determine for itself the best approach to marijuana within its borders.”

Notably, the STATES Act does not legalize marijuana on the federal level. Rather, it provides that the CSA would no longer apply to persons manufacturing, producing, possessing, distributing, dispensing, administering, or delivering marijuana if doing so in compliance with applicable State law or applicable Tribal law.

“This is an approach that allows the states to move forward,” said sponsor Senator Cory Gardner. “If a state like Oklahoma or Kansas or Nebraska chooses for themselves not to do this, they do not have to. The federal law remains the same. Nothing changes for them. But for those states like Massachusetts and Colorado, this is the opportunity our founders intended: allow states to be those laboratories of democracy.”

The STATES Act also amends the CSA’s definition of marijuana to exclude industrial hemp. To address financial issues caused by federal prohibition, the bill clearly states that compliant transactions are not trafficking and do not result in proceeds of an unlawful transaction.

Legislation Retains Some Federal Oversight

Under the STATES Act, the federal government does not fully relinquish control over state-level legalization. Notably, it sets an age limit of 21 for access to cannabis. It would not apply, however, to those accessing medical marijuana.

The bill also does not alter CSA Section 417 (prohibition on endangering human life while manufacturing a controlled substance) and maintains the prohibition on employing persons under age 18 in marijuana operations. In addition, the STATES Act bans the distribution of marijuana at transportation safety facilities, such as rest areas and truck stops.

Likelihood of Passage

The STATES Act is one of many bills currently pending in Congress that seeks to address state-level cannabis legalization. While its likelihood of passage is uncertain, it enjoys support from both Democrats and Republicans. In addition, President Donald Trump has indicated that he will sign the STATES Act if it reaches his desk.  When asked if he supported Senator Gardner’s marijuana federalism bill, the President responded, “I really do. I support Senator Gardner. I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.”

The legislation is currently pending before the House Committee on the Judiciary and the Committee on Energy and Commerce. The Scarinci Hollenbeck Cannabis Law Practice Group will continue to monitor the progress of the STATES Act and other cannabis-related federal legislation.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• NJ Workers’ Compensation Judge Rules Claimant Entitled to Insurance Coverage for Medical Marijuana
• How to Become One of New Jersey’s Six New Medical Marijuana Dispensaries
• The Path Forward for Legal Cannabis in New Jersey